27 April 2023

On the rise of
Sustainability
Reporting

What to think about when creating a sustainability report

As part of the Cambridge Independent's Masterclass series of expert insights, we offered inspiration and advice to those looking to measure and report on their company's sustainability.

Following a huge rise in requests for sustainability reports over the past few years, we have learnt what works and what does not when it comes to sustainability report design, as we show in this article.

Sustainability reports: Inspiration and advice

Trends in the way that companies and organisations report financial information and other performance indicators are constantly changing. We have produced hundreds of annual reports over the last decade for organisations in the UK and the US, including Ernst and Young, GSK, Silicon Valley Bank and Systemiq Capital. In the past few years, our agency has seen a huge rise of interest in sustainability reporting, both within general annual reports and as standalone environmental, social and governance (ESG) impact reports.

According to Managing Director, Mario Prelorenzo, annual and ESG reporting is about more than fulfilling a regulatory requirement: “It’s a legal obligation for all limited companies in the UK to produce an annual report, and at JDJ Creative we see this process as an opportunity to give a valuable insight into the heart of a company. Annual reports can be used to engender trust and reaffirm purpose amongst all stakeholders including investors, board members, staff and customers. Measuring and reporting on metrics related to ESG factors is a great way to bring a long-term sense of purpose into focus.”

Sustainability reporting legislation

Most companies are not yet legally obliged to report on sustainability measures, but there are indications that this will change soon. The UK government introduced mandatory climate change reporting rules for large corporations in April 2022. These rules currently apply only to the UK’s largest traded companies, insurers, and banks, as well as private companies with over £500 million in turnover and 500 employees. However, many industry experts believe that they will be extended to apply to small and medium-sized businesses (SMEs) too, meaning that all organisations may be affected in the future.

European regulations are changing too; new EU reporting requirements are being introduced as part of a ‘European Green New Deal’, which aims to make Europe the first climate-neutral continent by 2050. The Corporate Sustainability Reporting Directive (CSRD) directive strengthens the rules on reporting ESG information and broadens the set of companies required to comply. The European Parliament estimates that the number of companies legally obliged to comply will rise from 11,700 to 50,000. Regardless of current legal obligations, many of our clients already choose to invest time and money into developing their processes for sustainability reporting.

How should companies measure their ESG and sustainability performance?

In the UK, new performance indicators have been proposed by the Taskforce for Climate-Related Financial Disclosures (TCFC), which was set up with the aim of creating a single standardised framework to encourage accountability across all industries and sectors. The TCFD proposed new Sustainability Disclosure Requirements (SDRs) around four pillars — Governance, Strategy, Risk Management, and Metrics and Targets. Other measurement methods exist, and the most popular framework in the world is provided by the Global Reporting Initiative (GRI) which proposed a list of standards to show impact on the environment, society and the economy. Other approaches have been proposed by the Sustainability Accounting Standards Board (SASB) and the Integrated Reporting (IR) Framework. The framework that your company chooses will depend on factors such as the regions that you trade in and your type of industry. JDJ Creative can help clients decide which measurement factors to include in their reports (see our list for initial ideas).

What to include in a sustainability/ESG report?

  • A statement from the CEO outlining your policies on environmental, social and governance factors
  • A graphical representation of the company’s structure and business model
  • Your sustainability goals within the context of your industry (transport, energy, materials, biodiversity)
  • Performance over time, including KPIs and metrics e.g Tonnes of CO2 saved by you or your customers, reduction in aviation miles, reduction in energy bills, education initiatives to change behaviour
  • Positive stories about changing behaviour to reduce negative impact
  • Include additional positive impacts in the community such as volunteering or fundraising to support local charities

How to present an ESG report that inspires stakeholders

Our Founder and Creative Director, Jean Prelorenzo, works with clients on brand identity and the visual communication of their values, including ESG targets. She said: “Sustainability reporting is an opportunity to inspire your stakeholders by showing long-term value in a clear and attractive way. The data that you want to share is sometimes hard to present without using spreadsheets full of numbers, or never-ending PowerPoint presentations. Our designers suggest ways to show your impact in a clear, concise and engaging way. We might suggest using digital pdfs, microsites, infographics and case studies. By mixing raw data with engaging narratives, we help clients appeal to multiple audiences and bring them together with a common sense of purpose. Even seemingly small decisions about colours, typeface, infographics and imagery play an important role in increasing engagement and ensuring that information is easy to understand and to compare year on year.”

She continued: “Over the years, we’ve improved our processes to ensure as seamless a client experience as possible. This includes project management tools, step by step internal processes, quality control, proofreading and editing. We’ve grown from a small team of designers to a full-service creative agency. It’s exciting to manage projects from initial concept discussions through to completion.”

On the future of sustainability reporting, Mario Prelorenzo said: “We always advise clients to start thinking about this issue now to get ahead of the curve. Investors, regulators and stakeholders are increasingly interested in ESG and sustainability performance, so broadening the scope of your reporting now is a good way of showing everybody that you’re agile and prepared for the future.”

We see the process [of producing an annual report] as an opportunity to give a valuable insight into the heart of a company. Measuring and reporting on metrics related to ESG factors is a great way to bring a long-term sense of purpose into focus.

How and why we produced our first System Impact Report

Jessica Stewart, Chief Operating Officer of Systemiq Capital

Systemiq Capital backs the best climate-tech founders and helps them to scale faster.

Working in Venture Capital is exciting because the focus is on ideas, growth and potential. We span out from Systemiq, the world’s leading pure-play climate advisory firm: it partners with business, finance, policymakers and civil society to make economic systems truly sustainable and to meet the objectives of the Paris Agreement and the Sustainable Development Goals.

Last year, Systemiq Capital made the decision to produce our first System Impact and ESG Report, with the goal of showcasing the impact of our portfolio companies and sharing how we think about climate and biodiversity impact with a wider audience (we had no legal obligation to report on ESG measures, although the legislation is changing).

We are in the lucky position that the founders of our portfolio companies all share the same mission to build large, successful companies that make a positive difference to the environment. The fact that we only invest in companies that have the potential to have significant financial and climate impact simplified the task, because everybody was engaged and excited about being involved.

The process of identifying and gathering data for our first Impact Report highlighted a few challenges, despite everyone’s initial enthusiasm. We hadn’t set quantitative impact KPIs with all portfolio companies at the time of investment, so we missed the chance to be able to showcase the historical progress of the companies against their impact goals.

We are now investing from our second fund and when we first invest, we agree a small set of bespoke KPIs with founders that they report on annually. We invest in four areas: sustainable food and materials, clean transport, climate intelligence and finance, and climate restoration.

We do not set Fund level KPIs, for example around CO2 reduction, but instead work with each company on a bespoke set of metrics that help us to understand if they are progressing towards realising their impact potential. This allows us to take into account impact beyond CO2, for example, some portfolio companies are working to increase biodiversity which is critical to climate.

Designing the System Impact Report was a fun process because we approached JDJ Creative with a clean slate; we had no legacy or templates to adhere to. We needed an agency that could fully understand the brief and convert our high-level concepts into different design proposals.

The team at JDJ Creative were responsive and easy to work with, and the finished System Impact Report is professional, visually appealing and easy to understand. Potential investors and portfolio companies are able to read about our values through the Report.

It makes a brilliant calling card.

Read our case study: Systemiq Capital Impact Report

Download your guide to sustainability report design

Are you looking to publish your first sustainability report, or improve the design of your current offering?

Download our guide to sustainability report design and learn:

✅ The most popular reporting frameworks and how to use them
✅ The five key steps to successful sustainability reporting
✅ Our top tips for excellent report design

DOWNLOAD


Partner with JDJ for your sustainability report design

If you want to partner with an external agency, JDJ has over 10 years of experience designing reports for financial, educational, professional and technology companies in the UK and the US. Knowledgeable about the major sustainability reporting frameworks and with a proven track record of producing reports which inspire investors, consumers and internal stakeholders alike, we’d love to help on your sustainability reporting journey.

CONTACT US

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Get in touch

We’re always keen to hear from like-minded people with passion and purpose,
so let’s see if together we can bring your vision to life.